APPLICATIONS

Rackable Systems has announced that it is providing an update to its fiscal 2008 outlook. “The recent market downturn has been dramatic and has greatly impacted the timing of our customers’ buying decisions. The swift decline of the economy caused a demonstrable slow down in corporate purchasing as we entered September,” said Mark Barrenechea, president and CEO of Rackable Systems. “While we felt positive business momentum early in our third quarter, this abrupt financial and economic deterioration is impacting our ability to meet our previously provided fiscal 2008 outlook.” Barrenechea added, “Rackable is well positioned to improve its competitive advantage. Our balance sheet is cash strong with no debt and we remain in a robust R&D cycle, delivering compelling new products every quarter. In addition, Rackable has recently expanded its sales and service organizations to cover key new verticals, such as federal, oil and gas, media and entertainment and financial services. We will continue to monitor the economic environment, and provide further details on our strategy and outlook at our next earnings conference call.” Business highlights include: * R&D expansion leverages our new Shanghai Technology Center. * Next generation Cloud Computing and HPC product lines to be released in Q4. * We have hired new EMEA VP of Sales, Rod Evans, and APAC/Japan VP of Sales, Al DeiMaggi. * Rackable acquired 25 new customers in Q3. The Company has updated its annual financial projections for fiscal 2008 based on current business trends as follows: * Revenue is projected to be in the range of $275 million to $300 million. * Non-GAAP gross margin is projected to be in the range of 16% to 18%. * Non-GAAP EPS is projected to be in the range of ($0.16) to ($0.08). * Cash, cash equivalents and investments (ending year balance) to be $200 million to $175 million. Cash usage is primarily expected to fund key inventory positions for customer deliveries. Rackable Systems will report the financial results for the Company's third quarter of fiscal 2008 on Monday, November 3, 2008, at 2:00 p.m. PT (5:00 p.m. ET). The public is invited to listen to a live web cast of the call on the Investor Relations section of the Company's website at investors.rackable.com. A replay of the web cast will be available approximately two hours after the conclusion of the call and will remain available until the next earnings call.